American plastic equipment maker Thermoforming Systems LLC is crediting an Asian manufacturing partnership with letting it tap into growth in emerging markets like Brazil and India.
TSL, in Union Gap, Wash., expects sales from its partnership with Hong Kong-based Sunwell Machines Co. Ltd. to rise more than 50 percent this year, to about US$30 million, and that is prompting Sunwell to triple manufacturing capacity at its factory in Taipei, said TSL President James Naughton.
Speaking in an interview at the Taipei Plas show, held March 5-9 in Taipei, Naughton said the partnership has been able to use Sunwell's lower costs in Taiwan to produce budget machines that are popular in growing and price-conscious emerging markets.
In particular, that growth is coming from the so-called BRIC nations — of Brazil, Russia, India and China — with TSL already booking orders for 2010 that are roughly equal to its previous peak year of 2008, when it had US$20 million in sales.
“Our booked sales for 2010 are already over US$20 million and it's only March, and I would say a lot of that is BRIC,” said Naughton. He estimated full-year 2010 sales will hit US$30 million for the partnership, which markets under the name of Sunwell Global Ltd.
At Taipei Plas, for example, he said the company saw several “very serious buyers” from India.
Sales for Sunwell Global fell about 20 percent in 2009, to US$16 million, as the global economy slammed to a halt.
The partnership makes both thermoforming and extrusion equipment in Taiwan, and Naughton said TSL and Sunwell worked together to improve the Taiwanese machines. Sunwell Global is owned by TSL, and does not share common ownership with Sunwell Machines in Hong Kong.
Sunwell Global has been expanding its sales footprint in other markets. Last year it added a direct sales office in Brazil, its fifth worldwide, to match offices in Mexico, Taiwan, the United States and the United Kingdom, Naughton said.
It also would like to add direct sales in India and Eastern Europe in the next year or two, as developing markets worldwide grow faster than traditional markets like North America and Western Europe, said Naughton, who is also managing director of Sunwell Global.
Naughton said the partnership redesigned machines built for high volumes needed in North America, to be better suited for conditions in developing countries, and also has tweaked the Taiwan-made machines to improve capabilities.
Still, Taiwan allows for reduced manufacturing costs, he said: “The design and the cost basis of the machine is lower.”
A Sunwell Global machine from Taiwan with roughly the same capabilities as a TSL machine from the U.S. will be about 20 percent less expensive, Naughton said. But, he said it's difficult to make a direct comparison because the machines are different.
The market requirements in many emerging economies require different machines, he said.
As an example, he said North America stores usually use a standard, 32-ounce thermoformed drinking cup, with between 20 and 22 grams of polypropylene, while the common world standard cup design is only 200 milliliters (or roughly 6 ounces), with about 1.6 grams of plastic.
He said U.S-based TSL's sales also are recovering, with 2010 revenues expected to exceed 2008 levels of US$28 million. In part, that's because cup makers are investing in new equipment as restaurants and retailers move away from polystyrene and PET in favor of PP cups.
Some retailers are switching to PP because it is considered to have a lower carbon footprint than PET or PS, Naughton said.
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